What stays on paper
A scan is a legal stand-in for most everyday records, and the IRS accepts legible digital copies of receipts and statements. Some originals are not replaceable by a copy, or are slow and costly to replace.
- Keep birth, marriage and death certificates, adoption and citizenship papers, and divorce decrees.
- Keep Social Security cards and passports.
- Keep vehicle titles, property deeds and the original signed copies of wills, trusts and powers of attorney.
- Keep military discharge papers and anything bearing a raised or stamped seal.
Store them in a fire-resistant box at home or a safe deposit box, and scan them anyway so you have a reference copy.
Scanning well
The document scanner built into a phone's notes or files app finds the edges of the page, flattens it and saves a PDF, which beats a photograph. Put multi-page documents into a single file, and turn on text recognition so the contents can be searched. If you buy a dedicated sheet-fed scanner, 300 dots per inch is right for text. Name each file with the date, the source and the subject before you close it, because a folder of unnamed scans is just a shoebox again.
A weekly routine
- Drop all incoming mail and receipts into a single tray.
- Once a week, throw away the junk, scan what matters and file the scans.
- Shred anything that shows an account number, a Social Security number, a signature or a medical detail, using a cross-cut shredder, since strips can be reassembled.
- Check once a month that the scans are included in your backup.
How long to keep records
The IRS says to keep tax returns and their supporting documents for three years from filing in the ordinary case, and up to seven in certain situations, so seven is the simple rule. Keep records for a home, including the purchase and improvements, for as long as you own it plus that same period.
Paperless statements
Switching to electronic statements takes paper out of your mailbox, where it can be stolen. Banks keep statements online for only a limited number of years, however, so download the full year's statements every January. Send the notices to an email address you will still have in ten years, not a school or work account.
Note A folder of scanned tax returns and identity documents is everything a thief needs in one place. Keep it in encrypted storage, behind a strong password and two-factor authentication, and never as an email attachment to yourself.
